Global stock markets slid on Wednesday, extending losses from the previous session, as investors worried about a potential US economic slowdown and sold highly valued technology stocks.
In New York the S&P 500 lost 0.1 per cent while the Nasdaq Composite lost 0.4 per cent, weighed down by a 3.1 per cent fall for US chipmaking giant Nvidia after its 9.5 per cent drop on Tuesday.
The benchmark Stoxx Europe 600 index was down 1 per cent while the FTSE 100 lost 0.3 per cent. The falls came after US markets on Tuesday suffered their worst day since the sharp market sell-off at the start of August, driven by weak data on the state of the manufacturing sector.
Technology stocks led European declines, with Dutch chipmaking equipment group ASML falling 6.9 per cent. The jitters also hit Asian markets, with the region’s tech and semiconductor supply chain companies suffering particularly acute losses.
While the immediate trigger for the market turbulence was fear of recession following the weak US data, the declines also highlight investor unease over the high expectations set for technology earnings, particularly from investments in artificial intelligence.
“It’s a flashback to the August crash, after which we bounced back hard,” said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management, who suggested that alongside the weaker US data, prices of cyclical commodities such as oil and copper also indicated a more sluggish global economy.
“People are also coming back from their annual leave in August and we’re seeing some profit-taking,” he added.
Japan’s Topix finished down 3.7 per cent, with chipmaker Tokyo Electron falling 8.6 per cent. The Kospi 200 in South Korea closed down 3.2 per cent while Taiwanese chip giant TSMC lost 5.4 per cent. Hong Kong’s Hang Seng index was down 1.1 per cent.
“The major reason [for the fall in Asian markets] is and was the data from the US,” said Tomochika Kitaoka, chief equity strategist at Nomura.
“The market has a cloudy view of tech stocks globally ... we are seeing a natural correction process,” he said.
The yen strengthened 0.4 per cent to 144.83 against the dollar following a more hawkish tone from the Bank of Japan on interest rates.
Investors are looking ahead to a range of US jobs data releases this week, including the Jolts job openings data on Wednesday and, in particular, closely watched payrolls data on Friday.
Mohit Kumar, an analyst at Jefferies, said the market was unlikely to suffer the same sized moves as early August as investors had reduced their bets on risky assets.
“However, it does mean that the market will be jittery into the payroll data this week,” he said. “We are keeping our modest bullish bias on risky assets despite yesterday’s moves, but we are keeping the size of our positions small.”
Nvidia declined, after shedding 9.5 per cent on Tuesday, following a Bloomberg report that the US Department of Justice had sent the company a subpoena, deepening its antitrust probe.
A person familiar with the matter confirmed the subpoena, which comes as the DoJ assesses whether Nvidia is using its power as the primary supplier of AI data centre chips to disadvantage rivals. In a statement, Nvidia said it “wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them”. The DoJ declined to comment.
Crude oil prices were volatile after sharp falls on Tuesday. Brent, the international benchmark, was down 0.8 per cent to $73.17 (€66), having fallen 4.9 per cent in the previous session, while West Texas Intermediate, the US benchmark, lost 0.8 per cent to $69.76.
Investors also sold off other risky assets. Bitcoin dropped 2.8 per cent to $56,580. Gold, often seen as a haven asset, fell 0.1 per cent. – Copyright The Financial Times Limited 2024
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